Representative oppression petition maintainability survives later withdrawal where statutory shareholding was satisfied at filing.

Maintainability of a representative oppression and mismanagement petition is assessed at the time of presentation by reference to the statutory shareholding requirements under Sections 397, 398 and 399 of the Companies Act, 1956. Later withdrawal by some petitioners or loss of consent does not by itself extinguish the proceeding or defeat the rights of a consenting shareholder who was preserved liberty to pursue an independent challenge. A unilateral withdrawal cannot render a subsisting representative petition non-existent, and transposition may not be refused on that basis. The matter was remanded for fresh consideration in accordance with the earlier directions, without reliance on the withdrawn proceedings.

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Issues: (i) whether the appeal filed by a consenting shareholder could be rejected on the ground that the original company petition and the connected appeals had been withdrawn by other petitioners; (ii) whether a petition under Sections 397 and 398 of the Companies Act, 1956, filed in a representative capacity, could be treated as non-existent merely because one set of appellants withdrew, and whether transposition of the consenting party could be denied on that basis.

Issue (i): whether the appeal filed by a consenting shareholder could be rejected on the ground that the original company petition and the connected appeals had been withdrawn by other petitioners.

Analysis: The right to invoke Sections 397, 398 and 399 depends on the statutory shareholding requirement being satisfied at the time of institution. Consent may be used to aggregate the requisite holding, and later events such as withdrawal of consent or cessation of shareholding do not by themselves destroy maintainability. The earlier order of the Supreme Court had preserved the appellant's right to file an independent appeal and to contest the maintainability issue on merits, so the High Court could not defeat that liberty by relying on prior withdrawal orders.

Conclusion: The rejection of the appeal on this ground was unjustified and was not sustainable against the appellant.

Issue (ii): whether a petition under Sections 397 and 398 of the Companies Act, 1956, filed in a representative capacity, could be treated as non-existent merely because one set of appellants withdrew, and whether transposition of the consenting party could be denied on that basis.

Analysis: A petition of this kind is representative in nature and affects persons beyond the named petitioners. A unilateral withdrawal by some parties cannot ordinarily nullify the proceeding without regard to the interests of those represented. The court also emphasised that procedural rules could not be applied so as to extinguish a subsisting remedy, especially where the prior order of the Supreme Court had not been given full effect. The principle that a right must carry a remedy, and that an act of court should prejudice no one, supported restoration of the appellant's challenge.

Conclusion: The High Court erred in treating the petition and the appeals as non-existent and in refusing to entertain transposition and continuation of the proceedings.

Final Conclusion: The impugned High Court judgment was set aside and the matters were remanded for fresh decision in accordance with the earlier directions of the Supreme Court, without reliance on the withdrawn orders of the Division Bench.

Ratio Decidendi: In a representative oppression and mismanagement petition, maintainability is determined with reference to the statutory requirements satisfied at presentation, and subsequent withdrawal by some participants does not extinguish the proceeding or the remedy of those entitled to continue it.

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